**4. Legal and institutional framework of banks in Nigeria**

There are laws and institutional framework in Nigeria that govern the banking industry and services therein. First of such laws are the Central Bank of Nigeria Act 1958 and the Banking Act 1969 to guide the operations of the Central Bank of Nigeria. These laws stipulate paid up capital for indigenous banks as N250,000, while in the 1962 amendment, banks were allowed to buy real estate for expansion purposes, and the bank was empowered to regulate the interest rate structure of the commercial banks. In 1969, another amendment was effected on the 1962 Act as it broadens the sphere of monetary control to include other banks than commercial banks. A significant hallmark in the banking legal history in Nigeria was the enactment of the Banks and Other Financial Institutions Act (BOFIA) in 1991.

BOFIA granted limited autonomy to banks in some areas of operations. The Act gave operational autonomy to CBN to carry out its traditional functions as listed above to enhance its flexibility. In the Act, CBN Governor was mandated to chair the board of directors of the bank with other members of the board being the deputy governors, the permanent secretary, Ministry of Finance, and five parttime directors, from the Security and Exchange Commission, Commissioner for Insurance and Registrar General of Corporate Affairs Commission, and a representative of the Federal Ministry of Finance not below the rank of director.

Also, the regulatory power of the CBN was strengthened by the Banks and Other Financial Institutions (Amendment) Decree no. 4 of 1997. Through the amendments, CBN was empowered to vary or revoke any condition subject to which a licence was granted or may impose fresh or additional condition to the granting of a licence to transact banking business in the country. It was also stated that books of these banks and other financial institutions such as development banks, mortgage institutions and microfinance banks can be examined by the apex bank from time to time. With the decree, the bank has the power to withdraw licences of distressed banks and appointment of liquidators of these banks.

### **5. Efficiency of banking services in Nigeria**

There has been poor and inconsistent bank service delivery in Nigerian banking sector over the years, and that was why a series of reforms had evolved in the sector [3, 4]. However, there are variations in the quality of these banks' service delivery over the years, and this varied with the categories of banks in the country and who the assessor is (local regulator such as the Central Bank of Nigeria, Customers, and International raters such as International Monetary Fund (IMF), and World Bank [5]. As reported by the International Monetary Fund in 2016, Nigeria has the lowest percentage (14%) in terms of the ratio of broad money supply to gross domestic product (GDP) among selected countries. Fitch ratings report of 2015 revealed a decline in the performance of Nigerian banks in terms of service delivery. Earlier studies conducted in the country by [6, 7] also suggest this.

Scenarios in the Nigerian banking industry portrayed divergent opinion. From the customers' perspective, customers of banks in Nigeria have also expressed great

**131**

Nigerian banks.

*Bank Service Delivery in Nigeria*

*DOI: http://dx.doi.org/10.5772/intechopen.92075*

should improve the quality of service delivery.

Nigeria and found positive relationship between the variables.

industry as impediments to the growth of this subsector.

the provision of the services.

ture remains a challenge.

**6. Challenges undermining bank service delivery in Nigeria**

displeasure with the quality of services offered to them over the years in spite of the policies of the government through CBN. For instance, the study of [8] found extreme level of Nigerian bank customers' dissatisfaction. The study revealed long queues in the banking halls, ATM locations, needless delays in resolving complaints and interbank cheques issues as major problems of the sector. Seven years after, the study of [9] admitted poor service quality in the Nigerian banking sector. This means the trend of Nigerian bank customers' dissatisfaction remained unresolved. On the contrary, [10] study on customer service delivery and customer satisfaction in the banking industry found out that an increase in the number of working days and number of bank branches led to better levels of service delivery but can be improved upon as he subsequently recommends that the Nigeria banking industry

Electronic banking introduction in the last two decades brought in another twist to banking services in Nigeria. This has made banking services more convenient due to the associated benefits such as efficiency and accessibility. [11] in Nigeria revealed that customers enjoying electronic banking services are still not satisfied with the quality and efficiency of the services. This is expressed in the number of times customers physically visit banks and length of time spent before such services are received. Furthermore, [12] study on mobile banking and banks' service delivery reveals that it has improved transactional convenience and quick transaction alert. Similarly, [13] studied technological innovation and service delivery in

However, like any other banking services around the world, cases of insecurity and hacking of accounts remain a problem [14, 15]. For instance, the study of [16] on customer service and banking business in Nigeria found that customers are dissatisfied with long waiting times. The study of [14] identified users' network failure as a major problem to service delivery in the country, while [17] study examined how adoption of information technology impacted the banking industry in Nigeria. The authors found that IT adoption fundamentally transformed the content and quality of banking services delivery, thereby strengthening the competitiveness of

In the study of other banks like microfinance bank, [18] identified diversion of funds, inadequate finance and frequent changes in government policies, heavy transaction costs, huge loan losses, low capacity and low technical skill in the

1.**Knowledge gaps of bank personnel:** As established in the work of [19], representatives of the bank which are "frontline employees" have not been adequately trained to provide and exceed service required by customers due to knowledge gap in the areas of banking services and regulatory rules that guide

2.**Technological challenge:** In spite of the level at which electronic banking is presently adopted in the Nigerian banking industry, the ease and use of modern technological innovations is still not at its best. Developed world banking system is far beyond the use of ATM, mobile banking and other forms that Nigeria currently uses because of fraud and hackers. It is also on record that the technological infrastructure to support modern banking system in the country is still lacking. Aside from this, imbalance in the availability of ICT infrastruc-

#### *Bank Service Delivery in Nigeria DOI: http://dx.doi.org/10.5772/intechopen.92075*

*Banking and Finance*

and acquisitions. Basic services rendered by the merchant bank in Nigeria are the provision of medium- and long-term credits, arrangement of syndicated loans, provision of acceptance of credit facilities to their clients, equipment leasing, issuing house function, acceptance of deposits, provision of foreign exchange services,

There are laws and institutional framework in Nigeria that govern the banking industry and services therein. First of such laws are the Central Bank of Nigeria Act 1958 and the Banking Act 1969 to guide the operations of the Central Bank of Nigeria. These laws stipulate paid up capital for indigenous banks as N250,000, while in the 1962 amendment, banks were allowed to buy real estate for expansion purposes, and the bank was empowered to regulate the interest rate structure of the commercial banks. In 1969, another amendment was effected on the 1962 Act as it broadens the sphere of monetary control to include other banks than commercial banks. A significant hallmark in the banking legal history in Nigeria was the enact-

management/advice on portfolio of investment and unit trust management.

ment of the Banks and Other Financial Institutions Act (BOFIA) in 1991.

tative of the Federal Ministry of Finance not below the rank of director.

banks and appointment of liquidators of these banks.

studies conducted in the country by [6, 7] also suggest this.

**5. Efficiency of banking services in Nigeria**

BOFIA granted limited autonomy to banks in some areas of operations. The Act gave operational autonomy to CBN to carry out its traditional functions as listed above to enhance its flexibility. In the Act, CBN Governor was mandated to chair the board of directors of the bank with other members of the board being the deputy governors, the permanent secretary, Ministry of Finance, and five parttime directors, from the Security and Exchange Commission, Commissioner for Insurance and Registrar General of Corporate Affairs Commission, and a represen-

Also, the regulatory power of the CBN was strengthened by the Banks and Other

There has been poor and inconsistent bank service delivery in Nigerian banking sector over the years, and that was why a series of reforms had evolved in the sector [3, 4]. However, there are variations in the quality of these banks' service delivery over the years, and this varied with the categories of banks in the country and who the assessor is (local regulator such as the Central Bank of Nigeria, Customers, and International raters such as International Monetary Fund (IMF), and World Bank [5]. As reported by the International Monetary Fund in 2016, Nigeria has the lowest percentage (14%) in terms of the ratio of broad money supply to gross domestic product (GDP) among selected countries. Fitch ratings report of 2015 revealed a decline in the performance of Nigerian banks in terms of service delivery. Earlier

Scenarios in the Nigerian banking industry portrayed divergent opinion. From the customers' perspective, customers of banks in Nigeria have also expressed great

Financial Institutions (Amendment) Decree no. 4 of 1997. Through the amendments, CBN was empowered to vary or revoke any condition subject to which a licence was granted or may impose fresh or additional condition to the granting of a licence to transact banking business in the country. It was also stated that books of these banks and other financial institutions such as development banks, mortgage institutions and microfinance banks can be examined by the apex bank from time to time. With the decree, the bank has the power to withdraw licences of distressed

**4. Legal and institutional framework of banks in Nigeria**

**130**

displeasure with the quality of services offered to them over the years in spite of the policies of the government through CBN. For instance, the study of [8] found extreme level of Nigerian bank customers' dissatisfaction. The study revealed long queues in the banking halls, ATM locations, needless delays in resolving complaints and interbank cheques issues as major problems of the sector. Seven years after, the study of [9] admitted poor service quality in the Nigerian banking sector. This means the trend of Nigerian bank customers' dissatisfaction remained unresolved. On the contrary, [10] study on customer service delivery and customer satisfaction in the banking industry found out that an increase in the number of working days and number of bank branches led to better levels of service delivery but can be improved upon as he subsequently recommends that the Nigeria banking industry should improve the quality of service delivery.

Electronic banking introduction in the last two decades brought in another twist to banking services in Nigeria. This has made banking services more convenient due to the associated benefits such as efficiency and accessibility. [11] in Nigeria revealed that customers enjoying electronic banking services are still not satisfied with the quality and efficiency of the services. This is expressed in the number of times customers physically visit banks and length of time spent before such services are received. Furthermore, [12] study on mobile banking and banks' service delivery reveals that it has improved transactional convenience and quick transaction alert. Similarly, [13] studied technological innovation and service delivery in Nigeria and found positive relationship between the variables.

However, like any other banking services around the world, cases of insecurity and hacking of accounts remain a problem [14, 15]. For instance, the study of [16] on customer service and banking business in Nigeria found that customers are dissatisfied with long waiting times. The study of [14] identified users' network failure as a major problem to service delivery in the country, while [17] study examined how adoption of information technology impacted the banking industry in Nigeria. The authors found that IT adoption fundamentally transformed the content and quality of banking services delivery, thereby strengthening the competitiveness of Nigerian banks.

In the study of other banks like microfinance bank, [18] identified diversion of funds, inadequate finance and frequent changes in government policies, heavy transaction costs, huge loan losses, low capacity and low technical skill in the industry as impediments to the growth of this subsector.
